In the video above, we have Nick Gerli of Reventure Consulting, who I've been watching for over two years now. He's been calling the trends in residential real estate really well that whole time. In this video above he shares the news that the median prices for new homes are down 18% over the last year. Yep. As the economies of most major nations grind to almost to a halt at the end of 2023, the U.S. residential real estate market is just one of many industries heading into some even more difficult times.
Last week, I wrote this post about the bicycle industry, talking about how screwed up it is after the pandemic shutdowns, supply shocks, and the overall crazy economic shit storm of the last four years. As a guy who was a hardcore BMX freestyler and industry guy in the 1980's, I really want to see the BMX bike, mountain bike, and over bicycle industry, figure things out, and get back on track again. I spent 20 years of my life riding daily, and hope to get back to that at some point in the future. But BMX, and the whole bicycle industry, is small time compared to some of the other large industries out there. Many, if not most industries, are struggling after the last four years of the pandemic, shutdowns, supply shocks, $6 trillion in "helicopter money," high inflation, and then a historic rise in interest rates.
Last week's post about the bike industry was just a look at the turmoil there, because that's where I came from, where my first "real job" was, 37 years ago. Here are some YouTube videos by people looking at several other major industries which are struggling now, along with my thoughts.
My underlying, Big Picture thesis on today's crazy business environment, is that we're in what I call The Big Transition. This is the continuation of what futurist Alvin Toffler first described way back in 1980, in his book, The Third Wave. We are in a transition period between the fading Industrial Age, and the still emerging Information Age. Many whole industries have not made the full transition from the old, Industrial Age business models, into a new, viable, Information Age business models. This recession (which I think we're already in) will force the issue for thousands of businesses, large and small, and dozens of different entire industries. These next few years will be really tough for nearly everyone, but will also present amazing opportunities for enterprising business people. Here are some of the industries really struggling right now.
Why the U.S. banking system is in crisis- Lena Petrova (October 2023)
The commercial real estate crisis of empty offices and the "Urban Doom Loop."- CNBC October 2023 Now... this is CNBC, which means it is telling you "The Narrative" that the powers at be want you to believe. Yes, Big Cities are taking big hits from the decline in office space rent. But the big tech cities, like New York City, San Francisco, L.A., Seattle, and Austin, will rebound in time.
Right now business interests in less popular cities are trying to get people, particularly tech people and and tech businesses, to migrate en masse to many smaller cities, still struggling from the loss of factory jobs in previous decades. So there's a big Narrative right now that there's a huge migration of people (particularly tech people and tech companies) that are moving to these (mostly red state) cities and regions. But they are over hyping the actual movement of people to those regions. There are numbers of people moving to southern, midwest, and northeast cities now, and that may continue for the next couple of years. But in 2-5 years, coming out of this next recession, I believe the Big tech cities will rebound, as they have time after time, and older industrial-based cities will still be struggling, overall.
Meanwhile, dozens, probably hundreds, of office buildings will be given back to the banks, or be foreclosed on, or be part of bankruptcies in the next couple of years. This will lead to the collapse of a more banks, very likely a few hundred of them, over the next few years. Most at risk are those regional banks that so came into focus after the March 2023 bank collapses.
Car values are dropping- the car and truck industry is a mess- Lucky Lopez- Mid November 2023
EV car values are dropping, too- Lucky Lopez- 11/30/2023
The Trucking industry "bloodbath"- Trucking Made Successful channel, 11/29/2023. During the supply shock phase of the pandemic, there was a huge shortage or truck drivers for a while. Not surprisingly, as things opened up, and big money was flowing, more trucking companies and more drivers took to the road. Now things are slowing back down overall, and the trucking industry is struggling. This is happening even with the closing down of Yellow trucking, which laid off 30,000 workers, about 22,000 of them drivers a couple of months ago.
The Rise and Fall of the American Mall- The History Guy- September 2012. The dying off of shopping malls as a center of social life, as well as the huge drop in sales of shopping at department stores, has led to both dying malls, dead malls (70% vacant or more), and fully abandoned malls.
Sure you can blame Amazon, but I see the decline of malls as the dying off of the Industrial Age goods distribution system of huge department stores and shopping malls, as the Information Age goods distribution system (phone app and that item is on your door step two days later) rose to fill the needs of millions of today's consumers.
There were once about 2,500 fully enclosed shopping malls, the number is somewhere around 700 now, in late 2023. The huge influx of helicopter money by The Fed, in 2020 and 2021, slowed down the Retail Apocalypse, but as consumers have run out of that money, retail store closings have begun picking up again. The consensus view is that the very high end malls, and the very low end ones, those just above flea market and swap meet status, will probably survive. But a whole bunch of the mid range malls, located largely in mid range cities outside large metro areas, will continue to die off. There will be malls in the future, but a much lower number of them, and they won't play the cultural role they once did. Unless some new cultural re-invention of malls as experience centers comes along. The recession we're heading into now should take out several dozen more malls in the next few years.
The Self-Storage business has been thrown for a loop over the last four years, and 2023 has caused major struggles for many storage unit owners- Self Storage Income, September 2023. The Self-Storage industry popped out of nowhere about 30 years ago, and those familiar little overpriced garages are everywhere now. In the 2010's, REIT's (Real Estate Investment Trusts), and other Big Money, got into the game, and changed it forever. Now it's a business of a teaser rate to get you into a unit, and then once you move all your stuff in, they know they can jack up rates dramatically, and nearly everyone will pay the higher rent, rather than move all their stuff somewhere else. But higher interest rates, higher real estate values in recent years, and a higher debt load, have hit their margins.
The movie theater industry got hammered by the pandemic, and they are struggling to survive and adapt at this point- PBS News Hour, March 2023 According to a slate at the end of this news segment linked, there are now about 3,000 less movie screens in the U.S., than there were in 2019. As we all know, Covid-19 completely shut down movie theaters for many months. Then AMC, the largest theater owner, became one of the meme stocks when that craze hit. Due to that, their stock price surged from just over $8 per share, to peak around $230 per share. That bought AMC some time, because it gave the business more money to work with. But their share price just collapsed in August 2023, and is $6.65 as I write this. So they are still struggling, going into the 2023 holiday season.
Meanwhile, the second largest theater chain, Regal (which includes the former UA or United Artists theaters, among others), got bought out by British theater chain Cineworld. Then Cineworld went bankrupt, both in the U.S. and later in the U.K. I dug into their story in this blog post, about the big Barbenheimer movie weekend, back in July. Cineworld couldn't get themselves out of bankruptcy, so they were taken over by their bankers. The bankers then managed to form a new corporation, transfer Cineworld and Regal's theaters into it, and completely blew off the $4.5 billion in debt they owed to shareholders. Just said, "Uh, yeah, you guys ain't gettin' paid." Then they kept the chains going, like nothing had happened, but in a new corporation with an entirely new board of directors, and they're pretending it's just the same Cineworld. Check out the very last sentence of the Hollywood Reporter article linked above. In any case, a few high grossing movies, like Barbie, Oppenheimer, and Top Gun: Maverick have helped keep the theater chains afloat, for now. But the huge rise in popularity in streaming thanks to the pandemic, the proliferation of 85 and 98 inch home screens, and the changing tastes of theaters goers, keeps theaters from thriving again, at least right now.
Like I've been writing for over 4 1/2 years now, in posts like this one from March 2019, "Our economy is powered by unicorn farts." We are in for a major recession (or depression), and a monumental shift in the business world, and society at large. Yeah, The Big Transition thing I keep harping about. Alvin Toffler called this change 43 years ago. Now it's here, and things are going to get even crazier than the last 4 years. This will be really hard for most people, but this period will also have incredible opportunities for both business and social entrepreneurs, and people with good ideas about how to build a better future, from the neighborhood level to the global level. And no I'm not talking about the Globalist/WEF agenda, their plans are falling apart, too.
These next two or three years are the reason I've been writing about a major coming recession for so long. These next few years will change society going forward. But so did personal computers, the internet, smartphones, and the democratization of media, due largely to those devices. Change. There's more change coming. A lot more. If you have some ideas to build or try something new, these next few years are a great time to give it a shot.
I'm doing a lot of writing on Substack these days, check it out:
No comments:
Post a Comment